INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - Non-offering of capital gain on transfer of possession of land to developer under bona fide belief as to taxability in the year of completion of project -

During assessment year 2012-13 assessee entered into agreement dated 10-2-2012 with a property developer 'S' for development of residential housing society at his land . The value of consideration for assessee in the agreement was decided at Rs. 6 crores. Assessee during the year received two shop in a mall for value of Rs. 94,08,000 as consideration from developer 'S' against sale of one of the unit of the project sold. But assessee failed to incorporate such sale proceed in income tax return. Assessee during assessment proceeding submitted that same was omitted to offer in income tax return due to some mistake and agreed to pay due taxes on same. Accordingly, AO calculated LTCG at Rs. 79,77,240 and added the same to total income of the assessee. AO further levied penalty under section 271(1)(c) for filing inaccurate particulars. Assessee contended that such income was not offered to tax under bona fides belief that the same would be taxable upon completion of in the return entire project.Held: Admittedly, land had been handed over to developer against the consideration which was fixed at Rs. 6 crores. Therefore, land has taken place in the assessment year 2012-13 in pursuance to the agreement dated 10-2-2012. The conditions as specified under section 53A of the transfer of property Act 1882 had been satisfied since land was transferred to developer with possession in the assessment year 2012-13 and transfer as per section 2(47)(v) had taken place, income on such transaction was taxabled in assessment year 2012-13. As such, there could not be any penalty merely on the ground that assessee had offered some income during assessment proceedings which was actually not chargeable to tax in the year under consideration. Contention of assessee was not doubted by AO. Therefore, it can be inferred that there was no deliberate/willful act on the part of assessee either to conceal income or furnish the inaccurate particular of income and accordingly levy of penalty under section 271(1)(c) was not justified.

Supported by:Reliance Petroproducts (P) Ltd. (2010) 189 Taxman 322 (SC) : 2010 TaxPub(DT) 1683 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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